Background Information on Inter-American Development Bank Environmental and Social Safeguards Policies and Procedures 3 June 2011

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1 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment A. ENVIRONMENTAL ASSESSMENT OP-703 Environment and Safeguards Compliance Policy; Guidelines; Safeguard Screening Form World Bank Policies & Procedures on Environmental Assessment OP 4.01 Environmental Assessment, BP 4.01 Environmental Assessment, OP 4.01 Annexes A, B, C Overarching Objective: To help ensure the environmental and social soundness and sustainability of investment projects and to support integration of environmental and social aspects of projects into the decision making process. SCREENING Directive B.3 1. Use a screening process for each proposed project, as early as possible, to: (a) determine the appropriate extent and type of environmental assessment (EA) so that appropriate studies are undertaken proportional to potential risks; All Bank-financed operations will be screened and classified according to their potential environmental impacts. Screening will be carried out early in the preparation process. The screening process will consider potential negative environmental impacts whether direct, indirect, regional or cumulative in nature, including environmentally related social and cultural impacts, of the operation and of its associated facilities if relevant. Bank operations will be classified according to their potential impacts so that the appropriate environmental assessment or due diligence requirements are selected for the operation. Directive B.5 Guidelines Requirements: As part of the overall preparation and design process of Bank operations, the Bank requires that Category A and B operations be subject to Environmental Assessments (EA), according to the nature and significance of the potential impacts of the operation. OP, 8: The Bank undertakes environmental screening of each proposed project to determine the appropriate extent and type of EA. The Bank classifies the proposed project into one of four categories, depending on the type, location, sensitivity, and scale of the project and the nature and magnitude of its potential environmental impacts. (OP, 8) Categories: A, B, C, or FI (see definitions below). OP, 7: Depending on the project, a range of instruments can be used to satisfy the Bank s EA requirement: environmental impact assessment (EIA), regional or sectoral EA, environmental audit, hazard or risk assessment, and environmental management plan (EMP). EA applies one or more of these instruments, or elements of them, as appropriate. 1 These Operational Principles are excerpted directly from Table A1 in OP 4.00, Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-Supported Projects (Source: These Operational Principles are being used in this context to provide an overview of and a framework for analyzing the World Bank s safeguards relevant for REDD+. 1

2 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment World Bank Policies & Procedures on Environmental Assessment DIRECT/INDIRECT IMPACTS (b) assess direct, and, as relevant, indirect, cumulative, and associated impacts. Directive B.3 The screening process will consider potential negative environmental impacts whether direct, indirect, regional or cumulative in nature, including environmentally related social and cultural impacts, of the operation and of its associated facilities if relevant. Directive B.5 Guidelines A. The Environmental Impact Assessment: Standards The EIA report is required to comply with the requirements of this policy, and will be reviewed by the project team. The requirements of the EIA process, as presented here and complemented in Annex II, provide guidance to fulfill such requirements. Annex II o A.1 Scoping: This preliminary assessment by the borrower is used during the early stage of project identification. It requires understanding the proposed project and all its components by referring to technical and other pre-feasibility or feasibility documents, undertaking field surveillance in the area of influence of the project and holding discussions with agencies and organizations linked to the project. o A.8 Preparation of the EIA Report: Section 4 - Environmental and Associated Social Conditions: This section includes descriptions of the area of influence (direct and indirect) or study area (which are ideally determined at initial scoping) and the relevant physical, biological and socioeconomic conditions. The information/data presented must be relevant to decision-making 2 regarding project location, design, operation, and mitigation measures for adverse impacts.1f OP, 2: EA evaluates a project s potential environmental risks and impacts in its area of influence. OP Annex A.5: Project area of influence: The area likely to be affected by the project, including all its ancillary aspects, such as power transmission corridors, pipelines, canals, tunnels, relocation and access roads, borrow and disposal areas, and construction camps, as well as unplanned developments induced by the project (e.g., spontaneous settlement, logging, or shifting agriculture along access roads). The area of influence may include, for example, (a) the watershed within which the project is located; (b) any affected estuary and coastal zone; (c) off-site areas required for resettlement or compensatory tracts; (d) the airshed (e.g., where airborne pollution such as smoke or dust may enter or leave the area of influence; (e) migratory routes of humans, wildlife, or fish, particularly where they relate to public health, economic activities, or environmental conservation; and (f) areas used for livelihood activities (hunting, fishing, grazing, gathering, agriculture, etc.) or religious or ceremonial purposes of a customary nature. OP ft. nt. 1: This policy applies to all components of the project, regardless of the source of financing. OP Annex A.6: Regional EA pays particular attention to potential cumulative impacts of multiple activities. OP Annex A.8; Sectoral EA pays particular attention to potential cumulative impacts of multiple activities. 2 IDB relies on international good practice for criteria to determine the ADI and AII in each project during the scoping phase. These are consistent with the examples and guidance included in the WB OP Annex. 2

3 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment World Bank Policies & Procedures on Environmental Assessment SECTORAL/ REGIONAL 1.c. Use sectoral or regional environmental assessment when appropriate. Directive B.3 Any operation that is likely to cause significant negative environmental and associated social impacts, or have profound implications affecting natural resources, will be classified as Category A. These operations will require an environmental assessment (EA), normally an Environmental Impact Assessment (EIA) for investment operations, or other environmental assessments such as a Strategic Environmental Assessment (SEA) for programs and other financial operations that involve plans and policies. Directive B.5 The Bank will require compliance with specified standards for Strategic Environmental Assessments (SEAs) as defined in this Policy and detailed in the Guidelines. OP, 7: When the project is likely to have sectoral or regional impacts, sectoral or regional EA is required. OP, 9: Sectoral: If the Bank is not satisfied that adequate capacity exists for carrying out EA, all Category A subprojects and, as appropriate, Category B subprojects including any EA reports are subject to prior review and approval by the Bank. OP Annex A.6: Regional EA pays particular attention to potential cumulative impacts of multiple activities. OP Annex A.8; Sectoral EA pays particular attention to potential cumulative impacts of multiple activities. The SEA has the following objectives: (i) assure that the main environmental risks and opportunities of policies, plans or programs have been properly identified; (ii) engage early on governments and potentially affected parties in the identification and analysis of strategic issues, actions, and development alternatives; (iii) define and agree on a sequence of actions to address systematically and strategically environmental issues and priority actions, summarized in an SEA action plan for adequate monitoring and follow up; and (iv) assure that adequate environmental information is available and collected for the decision-making process. The SEA process should be triggered early in the decision-making process and prior to the implementation of the policies, plans or programs. Recommendations from the SEA process 3 should be incorporated into an operation s activities.2f Directive B.5 Guidelines Procedures and Implementation: B. The Strategic Environmental Assessment In the context of the Bank s operations, the SEA is often the appropriate tool for the following types of operations: (i) policybased lending operations (e.g., structural or sectoral adjustment); (ii) sector-wide loans, such as the tourism sector programs; and (iii) regional plans and programs, such as infrastructure development. 3 Specific aspects also covered by SESA guidelines. 3

4 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment World Bank Policies & Procedures on Environmental Assessment IMPACTS 2. Assess potential impacts of the proposed project on physical, biological, socioeconomic and physical cultural resources, including transboundary and global concerns, and potential impacts on human health and safety. Directive B.5 The Bank will require compliance with specified standards for Environmental Impact Assessments (EIAs) and environmental analyses, as defined in this Policy and detailed in the Guidelines. The operation s executing agency or borrower is required to submit all EA products to the Bank for review. The operation s approval by the Bank will consider the quality of the EA process and documentation, among other factors. Directive B.8 The environmental assessment process will identify and address, early in the project cycle, Transboundary issues associated with the operation. The environmental assessment process for operations with potentially significant transboundary environmental and associated social impacts, such as operations affecting another country s use of waterways, watersheds, coastal marine resources, biological corridors, regional air sheds and aquifers, will address the following issues: (i) notification to the affected country or countries of the critical transboundary impacts; (ii) implementation of an appropriate framework for consultation of affected parties; and (iii) appropriate environmental mitigation and/or monitoring measures, to the Bank s satisfaction. OP, 3: EA takes into account the natural environment (air, water, and land); human health and safety; social aspects (involuntary resettlement, indigenous peoples, and physical cultural resources); and transboundary and global environmental aspects. EA considers natural and social aspects in an integrated way. TIMING OP, 3: EA is initiated as early as possible in project processing. BP, 7: EA is an integral part of project preparation. Directive B.5 Guidelines Procedures and Implementation: Requirements: As part of the overall preparation and design process of Bank operations, the Bank requires that Category A and B operations be subject to Environmental Assessments (EA), according to the nature and significance of the potential impacts of the operation. The Environmental Impact Assessment: The EIA is undertaken to identify potential significant environmental and social impacts,. The EIA considers the entire project cycle, from the design stage to construction, operation and decommissioning, if applicable. Annex II The EA Process and EIA Report: For the purpose of this Policy, the EIA report includes information on the following topics, as appropriate, in relation to specific projects: baseline environmental and social 4

5 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment LEGAL FRAMEWORK 3. Assess the adequacy of the applicable legal and conditions; requirements under host country laws and regulations; applicable international treaties and agreements; sustainable use of natural resources; protection of human health, cultural properties, endangered species and sensitive ecosystems; use of hazardous substances; major hazards; occupational health and safety; socioeconomic impacts; land acquisition and land use; involuntary resettlement; impacts on indigenous peoples and communities; cumulative impacts of existing projects and proposed project; consultation of affected parties in the design, review and implementation of the project; consideration of environmentally and socially preferable alternatives; efficient production, delivery and use of energy; pollution prevention and waste minimization; and pollution controls (liquid effluents and air emissions) and waste management. A.8 Preparation of the EIA Report: Section 5 - Environmental Impacts: A prediction of the changes in the environment resulting from project construction and operation is to be considered, and an assessment of the effect on the surrounding physical, biological, and human systems, should be presented. Directive B.3 Guidelines Procedures and Implementation: The Safeguard Screening Form (SSF): For all applicable Bank operations, the project team will complete, when necessary in collaboration with an environmental and/or social specialist, the Safeguard Screening Form in order to identify potential environmental and environmentally related socio-cultural impacts and risks of the operation. The Safeguard Screening Form includes a checklist of environmental and social issues to assist the project team in classifying the operation.3f 4 Directive B.2 Guidelines See element 3, Legal Framework below. Directive B.2 The Bank will also require the borrower for that operation to ensure that it is designed and carried out in World Bank Policies & Procedures on Environmental Assessment OP, 3: EA also takes into account the variations in project and country conditions; the findings of country environmental studies; national environmental action plans; the country's 4 The checklist included in the Safeguard Screening Form (toolkit) requires consideration of impacts on physical, biological, socio-economic and cultural resources, including trans-boundary and global concerns (compliance with MEAs, identification of significant greenhouse gas emissions) and potential impacts on human health and safety, in accordance with the directives of all IDB safeguard policies, including the Environment and Safeguards Compliance Policy itself, as well as the Operational Policy on Indigenous Peoples, the Policy on Involuntary Resettlement, the Disaster Risk Management Policy and the Information Access Policy. 5

6 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment institutional framework, including applicable international environmental agreements, and confirm that they provide that the cooperating government does not finance project activities that would contravene such international obligations. compliance with environmental laws and regulations of the country where the operation is being implemented, including national obligations established under ratified Multilateral Environmental Agreements (MEAs). Directive B.2 Guidelines During screening (see Directive B.3), the project team will determine whether the operation potentially triggers relevant ratified MEAs, and if so, verify as part of the Bank s analysis/due diligence that necessary measures are in place for the proposed Bank operation to comply with the specific applicable ratified national MEA obligations of the respective country. In the context of implementing Policy Directive B.5 (environmental assessment requirements), the project team will review that the Terms of Reference (TOR) for the environmental assessment or the Bank s analysis or due diligence for the operation include a review of the operation s compliance with the applicable MEAs. World Bank Policies & Procedures on Environmental Assessment overall policy framework, national legislation, and institutional capabilities related to the environment and social aspects; and obligations of the country, pertaining to project activities, under relevant international environmental treaties and agreements. The Bank does not finance project activities that would contravene such country obligations, as identified during the EA. ALTERNATIVES 4. Provide for assessment of feasible investment, technical, and siting alternatives, including the "no action" alternative, potential impacts, feasibility of mitigating these impacts, their capital and recurrent costs, their suitability under local conditions, and their institutional, training and monitoring requirements associated with them. Directive B.5 The EIA process includes, as a minimum: examination of alternatives including a no project scenario. The EIA should be supported by economic analysis of project alternatives and, as applicable, by economic cost-benefit assessments of the project s environmental impacts and/or the associated protection measures.4f 5 The SEA has the following objectives: (ii) engage early on governments and potentially affected parties in the identification and analysis of strategic issues, actions, and development alternatives. Directive B.5 Guidelines Annex II: The EA Process and EIA Report: For the purpose of this Policy, the EIA report includes information on the following topics, as appropriate, in relation to specific projects: consideration of environmentally OP, 8.a: EA for a Category A project examines the project's potential negative and positive environmental impacts, compares them with those of feasible alternatives (including the "without project" situation), and recommends any measures needed to prevent, minimize, mitigate, or compensate for adverse impacts and improve environmental performance. OP Annex B.2.f: Systematically compares feasible alternatives to the proposed project site, technology, design, and operation-- including the "without project" situation--in terms of their potential environmental impacts; the feasibility of mitigating these impacts; their capital and recurrent costs; their suitability under local conditions; and their institutional, training, and monitoring requirements. For each of the alternatives, quantifies the environmental impacts to the extent possible, and attaches economic values where feasible. States the basis for selecting the particular project design proposed and justifies 5 Directive B.9 also includes specific alternative analysis requirements with respect to impacts on natural and critical habitats. 6

7 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment World Bank Policies & Procedures on Environmental Assessment and socially preferable alternatives;. o A.1 Scoping: 2: The TORs include information pertinent for potential parties who may conduct the EA.This would include: a brief history of the project, including alternatives considered. o A.3 Examination of Alternatives: Alternatives analysis in EIA is designed to bring environmental and social considerations into the upstream stages of development planning project identification and earlier as well as the later stages of site selection, design and implementation. Inclusion of social and environmental considerations at an early stage can reveal alternative options and cost-effective ways of achieving the same project objectives at lower environmental or social cost (measured either by the severity of the impacts or the costs of measures to mitigate them). Incorporating analysis of alternative design into the consultation mode also provides affected communities and other interest groups input into the decisions regarding location, size and technology of the proposed project. o A.5 Impact Mitigation: Normally, potential impacts are identified early during the initiation and scoping stages of EIA for a project, and measures to avoid or minimize impacts are incorporated into the alternatives being considered. In this respect, some of the most important measures to protect the environment or local communities become integral to the project design. o A.6 Economic Analysis: The Bank mandates performing economic analysis to assess the overall economic viability of projects. Category A operations should include an economic analysis, to the extent applicable and practicable, of alternative measures to avoid or mitigate adverse environmental impacts and risks. The economic analysis is undertaken to further evaluate the alternatives identified in the EIA and to incorporate environmental economic information into the final evaluation of the proposed project. The consideration of project alternatives may reveal, for example, approaches with slightly higher direct investment cost but much lower ongoing environmental remediation costs A.8 Preparation of an EIA Report Section 6 - Analysis of Alternatives: This section provides a description of relevant possible alternatives to the project/project design (including the no action alternative). These may include alternative location, site layout, technologies, design options, and management systems. The reasons why the various alternatives considered were rejected should be documented. To the extent applicable and feasible, an economic analysis may be used to provide further recommended emission levels and approaches to pollution prevention and abatement. 7

8 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment understanding of these options. World Bank Policies & Procedures on Environmental Assessment IDB considers these points covered by the standard content of the economic and institutional analysis of each alternative and an aspect to be addressed at the technical specification rather than policy level.idb analysis covers all aspects of economic analysis, management systems and institutional capabilities. See also MEs 3 and 6. PPAH 5. Where applicable to the type of project being supported, normally apply the Pollution Prevention and Abatement Handbook (PPAH). Justify deviations when alternatives to measures set forth in the PPAH are selected. Directive B.11 Bank-financed operations will include as appropriate, measures to prevent, reduce or eliminate pollution emanating from their activities. The Bank will require clients to follow source-specific emission and discharge standards recognized by multilateral development banks. Taking into account local conditions and national legislation and regulations, the environmental assessment report or environmental and social management report will justify the standards selected for the particular operation, consistent with this Directive. Directive B.11 Guidelines Emission and Discharge Standards: For numerical standards the Bank requires borrowers to follow source-specific emission and discharge standards recognized by multilateral development banks, such as the Pollution Prevention and Abatement Handbook (PPAH) (section III), The environmental assessment for the operation may recommend alternative emission levels to those recognized by multilateral development banks and/or alternative approaches to pollution prevention and abatement for the project. In such case, the environmental assessment or the Bank s ESMR, if applicable, must provide a description of what standards and/or approaches are chosen for the particular operation, project or site. The first order of reference is the PPAH, and if the pollutant is not covered by the PPAH or if the PPAH is not appropriate for a particular case, other standards recognized by MDBs should be used. OP, 6: The Pollution Prevention and Abatement Handbook describes pollution prevention and abatement measures and emission levels that are normally acceptable to the Bank. However, taking into account borrower country legislation and local conditions, the EA may recommend alternative emission levels and approaches to pollution prevention and abatement for the project. The EA report must provide full and detailed justification for the levels and approaches chosen for the particular project or site. 8

9 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment World Bank Policies & Procedures on Environmental Assessment PREVENTION/MITIGATION 6. Prevent and, where not possible to prevent, at least minimize, or compensate for adverse project impacts and enhance positive impacts through environmental management and planning that includes the proposed mitigation measures, monitoring, institutional capacity development and training measures, an implementation schedule, and cost estimates. B. Safeguarding the Environment: Managing Environmental Impacts and Risks: The Bank applies safeguards throughout the project cycle to ensure the environmental sustainability of all Bank-financed operations. In line with sustainable development practices, the Bank takes a general precautionary approach5f6 to environmental impacts. The Bank favors avoiding negative environmental impacts; when impacts are unavoidable, Bank-financed operations require mitigation measures; and for impacts that cannot be fully mitigated, compensation or offsets should be implemented. The Bank will work with borrowers to manage environmental risks effectively and to help develop environmental management capacity, as agreed. Where, in the opinion of the Bank, the environmental risks are deemed to be too great, the Bank would support the proposed investment only once the plan for mitigation of the risks is agreed. Directive B.4 In addition to risks posed by environmental impacts, the Bank will identify and manage other risk factors that may affect the environmental sustainability of its operations. These risk factors may include elements such as the governance capacity of executing agencies/borrower and of third parties Depending on the nature and the severity of the risks, the Bank will engage with the executing agency/borrower and relevant i third parties to develop appropriate measures for managing such risks.16f Directive B.5 o The operation s executing agency or borrower is required to submit all EA products to the Bank for review. The operation s approval by the Bank will consider the quality of the EA process and documentation, among other factors. o An EIA report must be prepared with its ESMP. o For operations requiring an environmental assessment but not subject to an EIA or an SEA, an environmental analysis should be performed including an evaluation of the potential OP, 2: The Bank favors preventive measures over mitigatory or compensatory measures, whenever feasible. OP, 5: The Bank advises the borrower on the Bank s EA requirements. The Bank reviews the findings and recommendations of the EA to determine whether they provide an adequate basis for processing the project for Bank financing. OP, 13: When the borrower has inadequate legal or technical capacity to carry out key EA-related functions (such as review of EA, environmental monitoring, inspections, or management of mitigatory measures) for a proposed project, the project includes components to strengthen that capacity. OP, 2: EA includes the process of mitigating and managing adverse environmental impacts throughout project implementation. OP, 19: During project implementation, the borrower reports on (a) compliance with measures agreed with the Bank on the basis of the findings and results of the EA, including implementation of any EMP, as set out in the project documents; (b) the status of mitigatory measures; and (c) the findings of monitoring programs. The Bank bases supervision of the project's environmental aspects on the findings and recommendations of the EA, including measures set out in the legal agreements, any EMP, and other project documents. OP Annex C: The EMP identifies monitoring objectives and specifies types of monitoring, with linkages to the impacts assessed in the EA report and the mitigation measured described in the EMP. 6 OP-703: Definitions: Precautionary approach means that where there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation. 9

10 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment environmental, social, health and safety impacts and risks associated with the operation, and an indication of the measures foreseen to control these risks and impacts. o The ESMP must include: a presentation of the key direct and indirect impacts and risks of the proposed operation; the design of the proposed social/environmental measures to avoid, minimize, compensate and/or mitigate the key direct and indirect impacts and risks; the institutional responsibilities to implement these measures, including, where necessary, institutional development, capacity building and training; the schedule and budget allocated for the implementation and management of such measures; the consultation or participation program agreed for the operation; and the framework for the monitoring of social and environmental impacts and risks throughout the execution of the operation, including clearly defined indicators, monitoring schedules, responsibilities and costs. The ESMP should be ready for, and reviewed during, the analysis/due diligence mission. o See also content under IMPACTS (element 2) above. Directive B.5 Guidelines Environmental and Social Management Plan: ESMPs describe the institutional arrangements, where necessary, and capacity building needed to carry out required mitigation and enhancement measures and put appropriate monitoring programs in place. ESMPs will complement and take into account, as appropriate, information generated in the Institutional Capacity Assessment System (ICAS) that is being increasingly used for project preparations. The draft ESMP is reviewed by the project team and should be agreed upon prior to Bank approval of the operation, and the key provisions of ESMPs are incorporated into the relevant project agreements between the Bank and the borrower. Prior to project approval, the ESMP presented by the team should have all of the necessary requirements and provisions to ensure an appropriate treatment of environmental issues during project execution. Specific mechanisms for corrective action based on feedback from inspection and monitoring programs should be included in the ESMP. World Bank Policies & Procedures on Environmental Assessment 10

11 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment World Bank Policies & Procedures on Environmental Assessment Directive B.7 The Bank will monitor the executing agency/borrower s compliance with all safeguard requirements stipulated in the loan agreement and project operating or credit regulations. Safeguard requirements, such as those in an ESMP must be incorporated into the project contract documents, its operating or credit regulations, or the project bidding documents, as appropriate, setting out as necessary milestones, timeframes and corresponding budgetary allocations to implement and monitor the plan during the course of the project. Safeguard indicators, as appropriate, should be clearly defined in the logical/results framework, followed up in project monitoring reports and reviewed in mid-term reviews and project completion reports.whenever ex-post evaluations are conducted, these will evaluate the sustainability outcomes of an operation. Directive B.7 Guidelines ESMP Requirements: Whenever mitigation measures are required for an operation, the contract, operation regulations and/ or sector letter will include safeguards provisions that define the commitments agreed upon by the Bank and the borrower that serve as binding obligations during execution. Country Office/PRI Project Team: The teams should verify that safeguards included in the loan contract, operating regulations or sector letters are implemented. Supervision may involve different tasks, such as visiting project sites, meeting with the borrower and its representatives, and reviewing environmental monitoring reports. Noncompliance: Where environmental or associated social noncompliance issues arise during project implementation, the project team in charge of supervision will work with the borrower and/or executing agency on an action plan consistent with this Policy, to resolve them. 11

12 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment World Bank Policies & Procedures on Environmental Assessment PARTICIPATION 7. Involve stakeholders, including project-affected groups and local nongovernmental organizations, as early as possible, in the preparation process and ensure that their views and concerns are made known to decision Makers and taken into account Continue consultations throughout project implementation as necessary to address EArelated issues that affect them. Directive B.6 As part of the environmental assessment process, Category A and B operations will require consultations with affected parties6f7 8 and consideration of their views. Consultations with other interested7f parties may also be undertaken in order to consider a broader range of expertise and perspectives. Category A operations will be consulted at least twice during project preparation, during the scoping phase of the environmental assessment or due diligence processes, and during the review of the assessment reports. For Category B operations, affected parties must be consulted at least once, preferably during the preparation or review of the ESMP, as agreed with the borrower. For consultation purposes, appropriate information will be provided in location(s), format(s) and language(s) to allow for affected parties to be meaningfully consulted, to form an opinion and to comment on the proposed course of action. EIAs and/or other relevant environmental analyses will be made available to the public consistent with the Bank s Disclosure of Information Policy (OP-102). During execution, affected parties should be kept informed of those project-related environmental and associated social mitigation measures affecting them, as defined in the ESMP. OP, 14: For all Category A and B projects during the EA process, the borrower consults project-affected groups and local non-governmental organizations (NGOs) about the project s environmental aspects and take their views into account. The borrower initiates such consultations as early as possible. For Category A projects, the borrower consults these groups at least twice: (a) shortly after environmental screening and before the terms of reference for the EA are finalized; and (b) once a draft EA report is prepared. In addition, the borrower consults with such groups throughout project implementation as necessary to address EA-related issues that affect them. Directive B. 6 Guidelines Consultation Process: The consultation process depends on the nature of the operation being considered for financing. For Category A projects, consultations can be preceded by a stakeholder analysis, an exercise consisting of mapping the social landscape associated with the project that identifies affected and interested parties, their inter-relations and interests regarding the project. The Bank also encourages meeting with experts and representatives of institutions and civil society organizations specializing in a given field or issue, to receive feedback and advice. In the case of consultations related to the preparation of resettlement plans, the borrower should follow the Operational Policy on Involuntary Resettlement (OP ). 8F 7 Affected parties are individuals, group of individuals or communities who may be directly impacted by a Bank-financed operation. Such impacts may be positive or negative. Affected parties may designate representatives as part of the consultation process. Note: This generally includes local NGOs and CBOs and other CS organizations that represent or are designated to represent affected parties. 8 Interested parties are individuals or groups who have expressed support or concern regarding a proposed or existing bank-financed operation. Note: these are understood to be individuals or groups who are not directly or indirectly affected. 9 A number of specific consultation requirements apply under OP-710 (Involuntary Resettlement) and OP-765 (Indigenous Peoples) and their respective guidelines. 12

13 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment World Bank Policies & Procedures on Environmental Assessment Timing of Category A Consultations: The first consultation should preferably occur during the scoping phase of the EA process for the operation. The second consultation should preferably occur when the impact assessment is being reviewed, in order to inform, gather comments, and adjust the assessment and the corresponding environmental and social management plan. Category A operations may benefit from more than two consultations, at the discretion of the borrower, if warranted by the nature, geographical extension of the operation, or other pertinent factors. After Bank Approval: For Category A and B operations, the borrower should continue an applicable degree of information disclosure and consultation, on the basis of the agreed Environment and Social Management Plan (ESMP). Directive B.5 The ESMP must include: the consultation or participation program agreed for the operation; Directive B.5 Guidelines Environmental and Social Management Plan: ESMPs outline responsibilities for public consultation and disclosure, and describe mechanisms for feedback and remedial action. They also indicate the estimated costs of these activities. Public consultations may improve the design of mitigation and monitoring measures, and should be considered in the finalization of ESMPs. Affected parties also may be asked to play a role in monitoring the ESMP. Directive A.1 Guidelines Programming CEAs. CEAs should be programmed and carried out well in advance of country strategy development to support the initial phases of policy dialogues with governments and to allow relevant consultations with interested parties, which may include representatives of the private sector, NGOs, and donor community. Practice Notes: According to Directive B.6, IDB consultation practices and general terms of reference for consultation allow for, and encourage, broad based participation. Consultation with directly and indirectly affected 13

14 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment parties in contrast, is required. IDB also relies on the scoping and EA processes to identify the most relevant stakeholders and to develop, in consultation with them, a consultation or participation program as part of the ESMP. IDB will apply these practices to FCPF operations. As highlighted above IDB policies and guidelines require meaningful consultation and due consideration to the views of affected peoples. Additional specific requirements apply to indigenous peoples (See IP Policy, p.10) 9F10 and in case of involuntary resettlement (See Involuntary Resettlement Guidelines, p. 42). As for continuity of consultation during project execution, the ESMP is expected to include feedback and remedial mechanisms. World Bank Policies & Procedures on Environmental Assessment INDEP. EXPERTS 8. Use independent expertise in the preparation of EA where appropriate. Use independent advisory panels during preparation and implementation of projects that are highly risky or contentious or that involve serious and multi-dimensional environmental and/or social concerns. Directive B.5 Guidelines Annex II: The EA Process and EIA Report: The EA process is under the responsibility of the borrower, as defined in Directive B.5. The EA process is a tool that requires both technical and management skills to collect, evaluate and present relevant environmental and social information for use in project planning and decision-making. The EIA report must indicate to decision-makers, the public and affected parties that its review process was carried out according to good professional practices. Practice Note: According to local laws, integrity guidelines and general good practice, IDB applies expertise requirements and follows accepted practices with respect to conflict of interest with respect to consultants engaged for EA preparation. OP, 4: For Category A projects, the borrower retains independent EA experts not affiliated with the project to carry out the EA. For Category A projects that are highly risky or contentious or that involve serious and multidimensional environmental concerns, the borrower should normally also engage an advisory panel of independent, internationally recognized environmental specialists to advise on all aspects of the project relevant to the EA. OP, ft. nt. 7: However, the borrower ensures that when individuals or entities are engaged to carry out EA activities, any conflict of interest is avoided. For example, when an independent EA is required, it is not carried out by the 10 Once the decision to proceed with the processing of a project with potential adverse impacts has been made, the Bank will provide guidance and verify compliance by the project proponent with the following: (ii) the implementation of socio-culturally appropriate and duly documented consultation and good faith negotiation processes with the affected indigenous peoples in relation to project design, analyses of alternatives, preparation, due diligence, and execution; 14

15 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment According to its current practices, IDB will use independent expertise in the preparation of EA for FCPF operations where appropriate. Advisory panels Directive B.3 Category A operations are considered high safeguard risk. For some high safeguard risk operations that, in the Bank s opinion raise complex and sensitive environmental, social, or health and safety concerns, the borrower should normally establish an advisory panel of experts to provide guidance for the design and/or execution of the operation on issues relevant to the EA process, including health and safety. World Bank Policies & Procedures on Environmental Assessment consultants hired to prepare the engineering design. INTEGRATION OF EA 9. Provide measures to link the environmental assessment process and findings with studies of economic, financial, institutional, social and technical analyses of a proposed project. Directive B.5 Guidelines Annex II: The EA Process and EIA Report o A.3 Examination of Alternatives: Alternatives analysis in EIA is designed to bring environmental and social considerations into the upstream stages of development planning project identification and earlier as well as the later stages of site selection, design and implementation. Inclusion of social and environmental considerations at an early stage can reveal alternative options and cost-effective ways of achieving the same project objectives at lower environmental or social cost (measured either by the severity of the impacts or the costs of measures to mitigate them). Incorporating analysis of alternative design into the consultation mode also provides affected communities and other interest groups input into the decisions regarding location, size and technology of the proposed project. o A.5 Impact Mitigation: Normally, potential impacts are identified early during the initiation and scoping stages of EIA for a project, and measures to avoid or minimize impacts are incorporated into the alternatives being considered. In this respect, some of the most important measures to OP, 2: [EA] is integrated closely with the economic, financial, institutional, social, and technical analyses of a proposed project. OP, ft. nt. 7: EA is closely integrated with the project s economic, financial, institutional, social, and technical analyses to ensure that (a) environmental considerations are given adequate weight in project selection, siting, and design decisions, and (b) EA does not delay project processing. 15

16 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment protect the environment or local communities become integral to the project design. ESG Guidance Note No. 2: Environmental and Social Screening and Classification: Selecting Appropriate Instruments, p. 12 The EIA should be supported by economic analysis of project alternatives and, as applicable, by economic cost-benefit assessments of the project's environmental impacts and/or the associated protection measures. Also, due consideration should be given to: analyzing compliance with relevant legal requirements; direct, indirect, regional or cumulative impacts, acquiring and using adequate baseline data as necessary; impact mitigation and management plans; the incorporation of EIA findings into project design; and, measures for adequate follow up, monitoring and supervision during implementation. Bank procedures require the preparation of an environmental and social strategy early in the project cycle so that environmental and social issues can be identified at that stage and integrated in project design, analysis, and execution plans and budgets as appropriate. World Bank Policies & Procedures on Environmental Assessment SUBPROJECTS 10. Provide for application of the material elements in this Table to subprojects under investment and financial intermediary activities. Directive B.13 For policy-based loans, the Bank will analyze during the design phase whether specific country policies and/or institutional changes supported by the operation will have significant and direct effects on the country s environment and natural resources. The appropriate sequence of actions and conditions to ensure environmental sustainability will be reflected in the corresponding action plan, as required. For financial intermediation operations (FIs), including global credit loans, the Bank will assess the executing agency s capacity for environmental management. The financial intermediaries will demonstrate that appropriate environmental procedures are in place so that final recipients of IDB financing are required to adopt and implement sound and adequate environmental measures. The borrower and the Bank will agree on implementing an appropriate and feasible Environmental Management System (EMS) tailored to the particular needs of the operation. Environmental review of a representative sample of projects should be performed periodically. Directive B.13 Guidelines B. For Financial Intermediary Operations and Global Credit Loans: The Bank s environmental OP, 9: For sector investment loans (SILs), during the preparation of each proposed subproject, the project coordinating entity or implementing institution carries out appropriate EA according to country requirements and the requirements of this policy. OP, 10: For a financial intermediary (FI) operation, the Bank requires that each FI screen proposed subprojects and ensure that sub-borrowers carry out appropriate EA for each subproject. Before approving a subproject, the FI verifies (through its own staff, outside experts, or existing environmental institutions) that the subproject meets the environmental requirements of appropriate national and local authorities and is consistent with this OP and other applicable environmental policies of the Bank. OP, 11: In appraising a proposed FI operation, the Bank reviews the adequacy of country environmental requirements relevant to the project and the proposed EA arrangements for 16

17 1 OPERATIONAL PRINCIPLES:0F Environmental Assessment DISCLOSURE 11. Disclose draft EA in a timely manner, before appraisal formally begins, in requirements need to be tailored to properly reflect this diversity of risk [of FI operations], ranging from simple requirements and procedures to more sophisticated environmental management systems. As part of the screening process and at the level of the project concept document, the project team should state the potential level of environmental impacts and risks associated with the FI operation and the proposed actions for the Bank s environmental and social strategy (i.e., environmental analysis/due diligence). This analysis should reflect the FI operation, the relevant FI environmental policies and procedures, and the FI or other relevant institutional capacity. o For FI operations with no or minimal risk, the Bank basically requires that the operation comply with applicable local environmental legislation and FI standard in-country practices related to environmental aspects... o For FI operations with moderate risk, the Bank should normally require that the FI implements a procedure regarding environmental risk management, and such procedure be commensurate to the impacts and risks of the activities financed. This procedure should consider compliance with local applicable environmental legislation and institutional capacity. o For FI operations with significant risk, the Bank should normally require that the FI develop and implement an environmental management system (EMS) that is commensurate with the FI risks and impact. The objective of an EMS is to properly identify, assess, mitigate and monitor the potential environmental impacts and risks associated with projects financed with IDB funds through the FI. An EMS should include a policy and requirements, process, resources, and review and reporting. Relevant obligations should be included in FI project documents and agreements. The Bank will monitor environmental aspects of FI operations as part of the Bank s loan supervision and evaluation, and in a manner consistent with the level of environmental risk. IDB requires FIs to apply EA requirements to moderate and high impact/risk subprojects though an ESMS and requires Borrowers in the multiple work programs to do so through operating regulations. The ESMS or regulations often require IDB review high risk activities (category A type projects), or exclude them from eligibility for financing. Directive B.6 For consultation purposes, appropriate information will be provided in location(s), format(s) and language(s) to allow for affected parties to be meaningfully consulted, to form an opinion and to comment World Bank Policies & Procedures on Environmental Assessment subprojects, including the mechanisms and responsibilities for environmental screening and review of EA results. For FI operations expected to have Category A subprojects, prior to the Bank's appraisal each identified participating FI provides to the Bank a written assessment of the institutional mechanisms (including, as necessary, identification of measures to strengthen capacity) for its subproject EA work. If the Bank is not satisfied that adequate capacity exists for carrying out EA, all Category A subprojects and, as appropriate, Category B subprojects--including EA reports--are subject to prior review and approval by the Bank. OP, ft. nt 17: The requirements for FI operations are derived from the EA process and are consistent with the provisions of para. 6 of this OP. The EA process takes into account the type of finance being considered, the nature and scale of anticipated subprojects, and the environmental requirements of the jurisdiction in which subprojects will be located. OP, 15: For meaningful consultations between the borrower and project-affected groups and local NGOs on all Category A and B projects proposed for IBRD or IDA financing, the borrower provides relevant material in a timely manner prior to consultation and in a form and language that are understandable 17